SA-born entrepreneurs give Nestlé a run for their money

South African-born Peter Grainger and Brent Hadfield saw an opportunity in 2011 when Nestlé’s coffee capsule patents expired – and made waves, or rather stirred things up – and have become one of the biggest players in the coffee industry

In 1986, the multinational company Nestlé introduced the Nespresso machine as well as patents prohibiting competitors to produce coffee capsules compatible with their machines.

Two South Africans saw an opportunity

The Nestlé patents expired in 2011 and South African-born former hedge fund executives Grainger and Hadfield saw a chance to get into the lucrative market with their company CaféPod. Nowadays, their range of products is available from Waitrose to Morrison and small businesses across the UK. They have become a fierce competition.

Grainger says, in a 2013 interview with The Telegraph, “The winner is the consumer,” says Grainger. “There’s more choice and more flavour. We’ve taken the froth off the premium coffee market by making the pods more accessible.”

A trip to South Africa ultimately inspired the entire business idea.

Peter Grainger says in a 2013-interview with Your Local Guardian,: “I was on the last day of my 12-month travels and had been staying with a friend in Cape Town, so went into a specialist shop to buy some supplies for his home coffee maker. The owner told me he was selling pods that were compatible with Nespresso machines and I suddenly realised there was a gap in the market in the UK.”

A little bit of history

The two men worked as fund managers at GLG Partners – and were following Nestlé’s success and the UK’s increasing taste for coffee. While tea is the Brit’s traditional favourite hot beverage, more and more people are getting a taste for espressos, lattes, flat whites and cappuccinos at home.

“UK coffee tastes have changed. The nation of tea drinkers is now a nation of coffee drinkers, and the Brits like their coffee strong,” Grainger told The Telegraph.

They got friends and family to invest in the scheme and decided to – instead of getting someone to make the capsules – invest in a machine that produces them.

Marketing strategies

Firstly, CaféPod had to tackle the assumption many coffee consumers had that they could only buy the capsules online or in the Nespresso shops. Secondly, Nespresso has a massive brand image and uses celebrities – like Matt Damon and George Clooney – for their ads.

So, CaféPod started slowly and offered free coffee outside of Waitrose stores in central London. This was successful and led to increased sales. The marketing team decided to rather use this time-intensive route than invest time in social media.

“Taking on the crown jewel of Nestlé was not to be taken lightly but we knew it was an opportunity that couldn’t just be ignored,” says Grainger to The Telegraph.

Meet the team

The four entrepreneurs behind the coffee company are Peter Grainger, Brent Hadfield, Philip Banfield and Kate Peers. They are based in Lower Richmond Road, Putney.